Copper falls as optimism about the US-China tariff pause fades
Copper fell on Thursday as optimism over the 90-day pause agreed by Beijing and Washington on most of their retaliatory tariffs began to fade and concerns returned about the longer-term demand outlook.
Benchmark copper on the London Metal Exchange (LME) fell 0.2% to $9,587.50 a tonne.
The red metal, used in energy and construction, had been rising for five previous sessions and on Wednesday hit $9,664, its highest level since April 2.
"Industrial metals have woken up to the fact that a lot of damage has already been done, both to the US economy and, especially, to the Chinese economy, and this raises new concerns about the outlook for future demand," said Ole Hansen of Saxo Bank.
"We must remember that this is a trade tariff truce and not a definitive agreement, with many potential obstacles still lurking," he added.
Citi analysts said in a note that average copper prices are expected to fall to $8,800 in the third quarter, from $9,300 in the current quarter.
"Trade tariffs remain significantly higher than before April, even with recent and potential new bilateral agreements, and we expect to see the impact on growth and the recovery in goods trade anticipated in physical metal consumption in the third quarter," Citi added.
Among other base metals, aluminum fell 1.1% to $2,499.50 per ton; zinc lost 1.4% to $2,726.50; lead added 0.4% to $2,002; tin gained 0.6% to $32,950; and nickel lost 0.5% to $15,785.
Gold prices recovered from early losses and traded steady on Thursday, helped by a weak dollar and technical buying, as investors awaited new U.S. economic data to better assess the future path of interest rates.
Spot gold traded flat at $3,179.07 an ounce, after hitting its lowest since April 10 earlier in the session. U.S. gold futures fell 0.3% to $3,179.20.
"We're seeing more of a short-covering bounce for gold. With the dollar weakening, it's likely contributed to demand," said Fawad Razaqzada, market analyst at City Index and FOREX.com.
According to Razaqzada, technical factors also played a role, as gold broke out of the key trendline support "that has been in place since the beginning of the year. That level sits around $3,130."
The dollar index declined 0.3%, making gold cheaper for holders of other currencies.
This week, the United States and China agreed to temporarily cut their reciprocal tariffs, reducing the trade war and reducing demand for gold as a safe haven.
In other precious metals, spot silver fell 0.4% to $32.09 an ounce; palladium rose 0.6% to $956.58; and platinum gained 0.7% to $982.53.
Eleconomista
